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Canadians worried about impact of U.S. fiscal cliff

Worries over the impending fiscal showdown south of the border are driving Canadians around the bend, a new survey shows.

By Madhavi Acharya-Tom YewBusiness Reporter

Wed., Dec. 12, 2012

The fiscal cliff south of the border is driving Canadians around the bend, a new survey shows.

Almost two-thirds of Canadians are worried that the impending U.S. fiscal cliff will hurt the Canadian economy, according to a survey commissioned by Sun Life Financial.

“Canadians are right to be worried about this. If it doesn’t get resolved and the U.S. economy goes into recession, the impact would fall into Canada as well and cause difficulties here,” said Sadiq Adatia, chief investment officer at Sun Life Global Investments.

“I think most of it will get resolved, but it’s not a bad idea to be cautious going into this period.”

The so-called fiscal cliff is a slate of automatic tax hikes and spending cuts that will take effect on Jan. 1 unless Republicans and Democrats can hammer out an alternative plan.

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These drastic measures will reduce the country’s trillion-dollar deficit — but experts also worry they could slash economic growth.

Sun Life’s Annual Check-Up Survey, conducted by Ipsos-Reid, polled nearly 1,300 Canadians on their personal finances and their outlook on the economy.

The survey also found that just over half of Canadians say that they had a good year in terms of work and personal finances.

But 54 per cent feel they are not better off financially than they were a year ago.

That’s not a surprise given the steady stream of bad news on the European sovereign debt crisis and the U.S. fiscal cliff this year, Adatia said. On top of that, Canadians are facing a slowing real estate market and sky-high household debt levels.

“I think Canadians are looking at that and saying, ‘I just don’t feel comfortable,’ ” he said.

On average, 48 per cent are optimistic about the economy in 2013, with 26 per cent feeling pessimistic.

The percentage of folks feeling gloomy about the outlook for next year jumps to 31 per cent in Ontario and 28 per cent in Quebec.

Manufacturers and exporters in central Canada have been hardest hit by the high Canadian dollar and lagging U.S. economy, Adatia said.

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